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Chapter 20

Example 15.4

Gain in Thin’s Group accounts

$ $
Sale Proceeds 15,000
Fair value of retained interest (30%) 15,000
Less
Carrying value of subsidiary disposed
Net assets of subsidiary at disposal date 12,000
Goodwill at disposal date (W1) 10,000
Less NCI at disposal (W2) (1,600)
(20,400)
–––––––
Gain 9,600
–––––––

(W1) Goodwill at disposal
$
Fair value of P’s investment 24,000
NCI at fair value 4,000
Fair value of S’s net assets at acquisition (8,000)
–––––––
Goodwill at acquisition 20,000
Impairment (50%) (10,000)
–––––––
Goodwill at disposal 10,000
–––––––

(W2) Non-controlling interest at disposal
$
NCI at acquisition 4,000
NCI % × post acquisition reserves (40% × (12,000 – 8,000)) 1,600
NCI % × impairment (40% × 10,000) (4,000)
––––––
1,600
––––––

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